Park Hotels & Resorts Inc. · NYSE:PK
Park Hotels & Resorts — Investor Presentation (July 2017)
45 slides from Park Hotels & Resorts's investor presentation, Jul 10, 2017
Slide 1: Investor Presentation Summer 2017
Investor Presentation Summer 2017 Waldorf Astoria Orlando Hilton Chicago Hilton Hawaiian Village Waikiki Beach Resort Exhibit 99.1
Slide 2: Mission
Mission To be the preeminent lodging REIT, focused on consistently delivering superior, risk-adjusted returns for stockholders through active asset management and a thoughtful external growth strategy, while maintaining a strong and flexible balance sheet 2 park hotels & resorts Mission To be the pr
Slide 3: Park Hotels & Resorts Overview
Park Hotels & Resorts Overview Casa Marina, a Waldorf Astoria Resort
Slide 4: Pillars of our Corporate Strategy
Preserve a strong and flexible balance sheet, with a targeted leverage ratio of 3x to 5x Maintain strong liquidity across lodging cycle and access to multiple types of financing Aspire to achieve investment grade rating Strong and Flexible Balance Sheet Continually improve property level operating p
Slide 5: Company Highlights
Company Highlights Park is a leading lodging real estate company with a diverse portfolio of iconic and market-leading hotels and resorts with significant underlying real estate value in top U.S. and international markets Leading Properties 67 premium-branded hotels and iconic resorts 35,000+ compet
Slide 6: 1Q17 Highlights: Solid Quarter; Guidance Increased
1Q17 Highlights: Solid Quarter; Guidance Increased +1.7% Comparable increase in RevPAR for domestic portfolio +15bps Increase in comparable Pro forma Hotel Adjusted EBITDA margins for our domestic portfolio(1) +4.2% Y/Y increase in Pro forma Adjusted EBITDA(1) +7.1% Increase in Group revenues, fuele
Slide 7: Seasoned and Experienced Management Team
Seasoned and Experienced Management Team Headquartered in McLean, VA 25 years of experience among senior management team Total of ~75 employees at Park Headquarters Park Hotels & Resorts Chairman, President & CEO Tom Baltimore SVP, HR Jill Olander EVP, Asset Management Rob Tanenbaum EVP, CFO & Treas
Slide 8: Portfolio Overview
Portfolio Overview Hilton San Francisco Union Square
Slide 9: Diversified Exposure to Attractive Markets
New York Hilton Midtown 1,929 rooms (1) Hilton San Francisco Union Square 1,919 rooms Hilton Chicago 1,544 rooms Hilton New Orleans 1,622 rooms Hilton Hawaiian Village 2,860 rooms Hilton Waikoloa Village 1,244 rooms (2) Waldorf Astoria Casa Marina 311 rooms Waldorf Astoria Orlando / Hilton Orlando B
Slide 10: Diversified Exposure to Attractive Markets
Diversified Exposure to Attractive Markets Washington 3 Hotels | 1,621 Rooms 2% Hotel EBITDA Utah 1 Hotel | 499 Rooms 1% Hotel EBITDA Northern California 7 Hotels | 4,513 Rooms 15% Hotel EBITDA Nevada 1 Hotel | 190 Rooms <1% Hotel EBITDA Southern California 6 Hotels | 2,888 Rooms 6% Hotel EBITDA Ari
Slide 11: Portfolio Overview
Portfolio Overview Geographic Diversity(1) (% of Total Rooms) Top Cities Location Type Diverse Revenue Stream(2) (% of TTM Total Revenue) Revenue Segmentation (1) As of 3/31/17 (2) Revenue segmentation based on TTM 3/31/17 consolidated portfolio hotel revenues
Slide 12: Park Portfolio: Well Insulated from Supply
Park Portfolio: Well Insulated from Supply ~2% Supply Growth for Park Against a backdrop of increased US supply growth, Park is well positioned relative to its peers With outsized exposure to Orlando, Oahu, San Francisco and New Orleans, Park anticipates just 2.2% supply growth per annum over the ne
Slide 13: Group Portfolio Positioned to Outperform
Group Portfolio Positioned to Outperform Park’s Leading Group Platform Park Hotels & Resorts portfolio’s strong group positioning increases visibility into forward bookings and reduces operating volatility by enhancing the stability and predictability of revenue throughout the lodging cycle Group/Tr
Slide 14: Investment Highlights
Investment Highlights Hilton New York Midtown
Slide 15: Investment Highlights
Investment Highlights 1 2 3 4 5 Size and Scale of Park Creates Competitive Advantage Significant Growth Profile: Acquisitions and ROI Opportunities Enhanced Profitability with Aggressive Asset Management Iconic Assets in Key US Cities and Geographic Diversity Strong and Flexible Balance Sheet
Slide 16: Size and Scale: Park ~2.5x the Size of Most Lodging REITs
Full Service Mixed & Limited Service Park is the second largest publicly traded Lodging REIT 1 Size and Scale: Park ~2.5x the Size of Most Lodging REITs (1) Source: Public company filings as of 3/31/17, and S&P Global. Market data as of 7/5/17 (1) Assumption excludes HST from calculation
Slide 17: Size and Scale: Park Ranks Among the Top Largest REITs
Size and Scale: Park Ranks Among the Top 25 Largest REITs Park TTM Pro-Forma Adjusted EBITDA vs. US REITs Universe(1) ($ in millions) Top 25 Largest REITs(1) ($ in millions) Park is among the Top 25 largest REITs out of 130 REITs based on TTM Adjusted EBITDA(1) 1 Source: Public company filings, NARE
Slide 18: Iconic Assets Valued at Well Below Replacement Cost
Iconic Assets Valued at Well Below Replacement Cost 2 Park’s assets are currently valued at a significant discount to replacement cost(1) Park EV Range $8.0 bn $9.0 bn $10.0 bn Portfolio Replacement Cost $18.5 bn $18.5 bn $18.5 bn Discount to Replacement Cost 57% 51% 46% Rooms(2) Mtg Space (sq. ft.)
Slide 19: Growth through Disciplined Allocation
Growth through Disciplined Allocation 3 Focus on building portfolio of Upper Upscale and Luxury branded assets in Top 25 markets and premium resort destinations Diversify brand and operator mix to include other global manager / franchisors Pursue larger scale deals (assets and portfolios) that offer
Slide 20: Capital Allocation: Target Larger Scale Acquisitions
Capital Allocation: Target Larger Scale Acquisitions Market Backdrop for Deals of Scale Less competition exists on larger transactions as only a limited number of investors have access to equity needed to pursue $250+ million single assets Consequently, the share of deals pre-empted and executed off
Slide 21: Brand Strategy Maximizes Revenue and Profitability
Brand Strategy Maximizes Revenue and Profitability Brands Matter: Park will focus on owning hotels and resorts in the luxury and upper upscale segments Benefits of Partnering with Brands Consistent quality through a branded product should allow Park to achieve higher RevPAR and margins as a result o
Slide 22: Asset Management
Asset Management Waldorf Astoria Orlando
Slide 23: Active Asset Management: Hands on Approach
Work with in-house project management team on ROI / repositioning efforts: Adding keys and/or meeting space Energy efficiency projects and F&B optimization Utilize in-house and external resources to drive profits in all revenue sources: food and beverage, retail, I.T. and parking Share best practice
Slide 24: Additional Internal Growth Opportunities Remain
Additional Internal Growth Opportunities Remain “Maximize each asset’s full potential through a focused approach on revenue management and cost containment initiatives, while purposefully addressing capital needs including ROI opportunities” 2016 Pro forma Hotel Adjusted EBITDA Margin(1) Opportunity
Slide 25: Active Asset Management: The Margin Story
Active Asset Management: The Margin Story 4 Revenue Management Opportunities Remixing the Mix: Look to increase Group business across our Top 25 hotels 400bps to 35% over the next two years, capitalizing on Park’s expertise with large group hotels Layer in select base contract business in certain ma
Slide 26: CapEx: Over $1.3bn Has Been Reinvested in Park's Hotels
CapEx: Over $1.3bn Has Been Reinvested in Park’s Hotels 4 Well-capitalized portfolio with ~$1.3 bn invested since 2011 to maintain competitive strength Historical Cumulative CapEx Spend (mn) (1) Yearly CapEx Spend as % of Total Revenue (mn)(2) 5-Year Avg. CapEx Spend vs Full Service Peers (% of Tota
Slide 27: Future ROI Projects: New Orleans
Future ROI Projects: New Orleans Hilton New Orleans Riverside: Development Rights/Land Sale Hilton New Orleans Riverside 1,622 room hotel with 130,000 sq. ft. of meeting space Adjacent to the 1.1 million sq. ft. New Orleans Ernest N. Morial Convention Center (NOCC) – 7th largest in the US Opportunit
Slide 28: Future ROI Projects: Orlando Bonnet Creek
Future ROI Projects: Orlando Bonnet Creek: Development Rights Hilton Bonnet Creek and Waldorf Astoria Orlando The 1,009-room Hilton and the adjacent 502-room Waldorf Astoria Orlando feature a combined 174,000 sq. ft. of meeting space, a 3-acre Florida-style lazy river pool, a luxurious spa, a renown
Slide 29: Balance Sheet
Balance Sheet Hilton New Orleans Riverside
Slide 30: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet 5 Debt Capital Structure Overview(1) $215 million of unconsolidated JV debt (pro rata) Target investment grade leverage profile over time Fixed vs. floating mix: 74% fixed / 26% floating Dividend and Payout Ratio Analysis On January 9th, Park declared a special stoc
Slide 31: In Focus: Hawaii
In Focus: Hawaii Casa Marina, The Waldorf Astoria Collection
Slide 32: Park's Hawaiian Exposure
Park’s Hawaiian Exposure Situated on a 22-acre ocean front property in Waikiki, the Hilton Hawaiian Village has nearly 3,000 rooms spread across six towers. Occupancy runs a portfolio high of 94.6%, while margins run an impressive 37%. In 2016, the hotel won a Certificate of Excellence from TripAdvi
Slide 33: Hilton Waikoloa Village
Hilton Waikoloa Village Hilton Waikoloa Village is a 1,244 room resort hotel located in Waikoloa, HI (Big Island) As previously disclosed, Park has an agreement with HGV whereby Park has transferred 600 rooms to HGV to be used as future time-share inventory Park has leased back all 600 rooms for an
Slide 34: Appendix
Appendix Casa Marina, The Waldorf Astoria Collection
Slide 35: Park Hotels & Resorts: Board of Directors
Park Hotels & Resorts: Board of Directors Name Principal Occupation Experience Thomas J. Baltimore, Jr. Chairman, President & Chief Executive Officer Park Hotels & Resorts Co-founder and former President and CEO – RLJ Lodging Trust (NYSE: RLJ) Former Executive – Hilton Hotels Corp., Host Marriott Se
Slide 36: Park Hotels & Resorts: Board of Directors (cont'd)
Park Hotels & Resorts: Board of Directors (cont’d) Name Principal Occupation Experience Christie B. Kelly EVP and Chief Financial Officer Jones Lang LaSalle Incorporated Chair of Audit Committee Park Hotels and Resorts Executive Vice President and Chief Financial Officer of Jones Lang LaSalle (NYSE:
Slide 37: 2017 Guidance
2017 Guidance 2017 Assumptions and Guidance Summary (1) Excludes unconsolidated joint ventures. (2) Excludes Hilton Waikoloa Village and Embassy Suites Washington DC Georgetown. (3) Excludes an income tax benefit of $2.288 billion in the first quarter of 2017 resulting from the derecognition of defe
Slide 38: 2017 Guidance (cont'd) EBITDA and FFO
2017 Guidance (cont’d) EBITDA and FFO (1) Excludes an income tax benefit of $2.288 billion in the first quarter of 2017 resulting from the derecognition of deferred tax liabilities upon Park’s declaration of intent to be taxed as a REIT. (1)Excludes an income tax benefit of approximately $2.288 bill
Slide 39: EBITDA, Adjusted EBITDA and Pro-forma Adjusted EBITDA
EBITDA, Adjusted EBITDA and Pro-forma Adjusted EBITDA Pro-forma Hotel Adjusted EBITDA, Pro-forma Hotel Revenue and Pro-forma Hotel Adjusted EBITDA Margin (1) Spin-off Adjustments include adjustments for incremental fees based on the terms of the post spin-off management agreements and estimated non-
Slide 40: Reconciliations: Non GAAP Financial Measures (cont'd)
Reconciliations: Non GAAP Financial Measures (cont’d) TTM Pro forma Adjusted EBITDA (1) TTM March 31, 2017 is calculated as the three months ended March 31, 2017 plus the year ended December 31, 2016 less the three months ended March 31, 2016. (2) Spin-off Adjustments include adjustments for increme
Slide 41: Definitions
Definitions EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA Margin Earnings before interest expense, taxes and depreciation and amortization (“EBITDA”), presented herein, reflects net income (loss), excluding interest expense, a provision for income taxes and depreciation an
Slide 42: Definitions (cont'd)
Definitions (cont’d) NAREIT FFO attributable to stockholders, Adjusted FFO attributable to stockholders, NAREIT FFO per share – Diluted and Adjusted FFO per share - Diluted NAREIT FFO attributable to stockholders, presented herein, is calculated as net income (loss) attributable to stockholders (cal
Slide 43: Definitions (cont'd)
Definitions (cont’d) NAREIT FFO per share – Diluted, presented herein, is calculated as the Company’s NAREIT FFO, as previously defined, divided by the number of fully diluted shares outstanding during a period. Adjusted FFO per share – Diluted, presented herein, is Adjusted FFO per share, as previo
Slide 44: Definitions (cont'd)
Definitions (cont’d) Occupancy Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels. Occupancy measures the utilization of the Company’s hotels’ available capacity. Management uses occupancy to gauge demand at a
Slide 45: About Park Hotels & Resorts and Safe Harbor Disclosure
About Park Hotels & Resorts and Safe Harbor Disclosure About Park Hotels & Resorts Inc. Park (NYSE: PK) is a leading lodging real estate company with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio consists of 67 premium-brande
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